Search found 53958 matches
- Wed Mar 27, 2024 11:23 am
- Forum: Personal Finance (Not Investing)
- Topic: Suggestions on handling disallowed Spousal Roth IRA contributions?
- Replies: 3
- Views: 248
Re: Suggestions on handling disallowed Spousal Roth IRA contributions?
Just received an email from our CPA as they work on our 2023 returns. For years we've done max Roth IRA contributions in January of each year. I've done 'backdoor' contributions via an otherwise empty tIRA after rolling my older tIRA into my employer 401k. For my non-working spouse we've just made straight Roth IRA contributions each year. But per the CPA note our 2023 AGI exceeds the income limits for eligibility for contribution to a Roth IRA via the spousal route. (For some reason I had it in my head that the AGI limit didn't apply to spousal account contributions) There are different limits for some things, but not this. Both of you are subject to the same limit Roth contributions. If you could not contribute directly to Roth IRA, then...
- Wed Mar 27, 2024 11:00 am
- Forum: Personal Investments
- Topic: Muni break-even tax rate
- Replies: 12
- Views: 1374
Re: Muni break-even tax rate
Munis might keep your MAGI for certain things down. Unfortunately, the MAGI for IRMAA is not one of them.
There are many different modified AGIs and each one is different.
https://www.bogleheads.org/wiki/Modifie ... oss_Income
- Wed Mar 27, 2024 10:57 am
- Forum: Personal Investments
- Topic: [Wait for new Dept. of Labor Financial Advisor Protections?]
- Replies: 9
- Views: 715
Re: [Wait for new Dept. of Labor Financial Avisor Protections?]
Frankly, I don't have a lot of hope that new regs will improve things. We've seen this before and while the intent of the protections was noble, the results were very disappointing. In short, a little while back, the "new fiduciary requirements" went into effect for a little while and companies just figured out a new way to charge people outrageous fees. The example that remains in my mind was for SIMPLE IRAs offered by a well known advisor company. Since they could no longer make commissions for funds sold in IRAs, they switched to having a 1.3% AUM model instead and very tight rules about what could be bought and not bought in the IRA. The customers did not benefit from the new regs at all. The result is that the fees didn't go ...
- Wed Mar 27, 2024 8:53 am
- Forum: Personal Investments
- Topic: TIAA 457b vs. Brokerage
- Replies: 17
- Views: 818
Re: TIAA 457b vs. Brokerage
Roth 457 would be great. For reasons I don't know, I was just assuming that was not available.tashnewbie wrote: ↑Wed Mar 27, 2024 8:45 amWould it be better for them to use Roth 457 instead of taxable? The tax drag would probably be at least 0.3% (15% LTCG and 2% estimated qualified dividends) which combined with the expense ratio comes close to the cost of the 457. I'm just trying to learn, not disagreeing with your advice.
- Wed Mar 27, 2024 8:22 am
- Forum: Personal Investments
- Topic: First Taxable Account Investment - VTI or VTSAX?
- Replies: 8
- Views: 530
Re: First Taxable Account Investment - VTI or VTSAX?
Personal preference. They are the same stuff in different packages and the mechanism for buying and sell is somewhat different.
At Vanguard, you can hold either one but if you want to move your account to another brokerage, you would likely need to exchange the mutual fund form into the ETF form to avoid fees at the new brokerage. That is easily done when/if you want to do that.
My preference is mutual fund, but many people like ETFs better.
At Vanguard, you can hold either one but if you want to move your account to another brokerage, you would likely need to exchange the mutual fund form into the ETF form to avoid fees at the new brokerage. That is easily done when/if you want to do that.
My preference is mutual fund, but many people like ETFs better.
- Tue Mar 26, 2024 6:03 pm
- Forum: Personal Investments
- Topic: TIAA 457b vs. Brokerage
- Replies: 17
- Views: 818
Re: TIAA 457b vs. Brokerage
It looks like there are going to be two pensions and at least one SS income stream. I'm not sure you need to defer money into the 457 at this point. The retirement income could (not necessarily will) put you into a tax bracket similar to where you are now. So you could be deferring at 22% now and end up paying 25% later on after tax rates revert to 2017 levels. That would not make a lot of sense. What's your best guess on your tax bracket in retirement? Use today's numbers rather than guess about future numbers. Will your income likely go up much before retiring? Good point all around. At full retirement age (57 for me and 54 for her) we're estimating $170k or so in pensions with a COLA for life. So RMDs could definitely be brutal when we'...
- Tue Mar 26, 2024 5:53 pm
- Forum: Investing - Theory, News & General
- Topic: Never selling shares
- Replies: 55
- Views: 3988
Re: Never selling shares
I agree that dividends are not free money. They are more like a forced sale. But in that case, since it is forced, why not used that stream of money to finance retirement and not sell any shares? Nothing wrong with this at all. If one lives off the "total return" from a portfolio, that would mean using both dividends and capital gains (selling shares) for living expenses. If someone gets all they need from dividends, there is no need to sell shares. Again, it simply means having more money than needed. It is the same as being able to live on a low withdrawal rate. Well. it could mean something else and this is something Vanguard has warned us about. A person could set up a portfolio so slanted toward maximum dividend production t...
- Tue Mar 26, 2024 5:44 pm
- Forum: Personal Investments
- Topic: Rolling over 401k
- Replies: 4
- Views: 338
Re: Rolling over 401k
Welcome to the forum. :happy You have not told us much, but there is nothing in your post that indicates that you need a Deferred Fixed Annuity. A possible exception might be a MYGA which is a kind of deferred fixed annuity (also known as a CD annuity) that you could use in place of a bond fund. We don't know what type of annuity this advisor is suggesting, but you need to wary of the fact that advisors will sometimes sell people annuities that they do not need. The advisor gets a commission. That's one way they make a living. Why are you considering a change from what you have now? What problem are you trying to solve? Lacking further information, I don't see what an annuity would do for you that your Stable Value fund is not doing already.
- Tue Mar 26, 2024 5:27 pm
- Forum: Personal Investments
- Topic: Rolling into the TSP after military service?
- Replies: 10
- Views: 718
Re: Rolling into the TSP after military service?
Many plans do not accept rollovers after leaving employment. The TSP is an exception - they do accept rollovers of pre-tax money - even after separation from employment.
- Tue Mar 26, 2024 5:23 pm
- Forum: Investing - Theory, News & General
- Topic: Never selling shares
- Replies: 55
- Views: 3988
Re: Never selling shares
You seem to think that the thrown off money is sort of free money...when in fact, it is a withdrawal...part of the 4%.
When people are living off their dividends, they are just able to live on a smaller withdrawal rate - maybe 2%ish - than other people who might need a 4% withdrawal rate.
What is "ideal" is not that they don't have to sell shares. It's that they have more money than they need.
- Tue Mar 26, 2024 4:52 pm
- Forum: Personal Investments
- Topic: TIAA 457b vs. Brokerage
- Replies: 17
- Views: 818
Re: TIAA 457b vs. Brokerage
It looks like there are going to be two pensions and at least one SS income stream. I'm not sure you need to defer money into the 457 at this point.
The retirement income could (not necessarily will) put you into a tax bracket similar to where you are now. So you could be deferring at 22% now and end up paying 25% later on after tax rates revert to 2017 levels. That would not make a lot of sense.
What's your best guess on your tax bracket in retirement? Use today's numbers rather than guess about future numbers.
Will your income likely go up much before retiring?
The retirement income could (not necessarily will) put you into a tax bracket similar to where you are now. So you could be deferring at 22% now and end up paying 25% later on after tax rates revert to 2017 levels. That would not make a lot of sense.
What's your best guess on your tax bracket in retirement? Use today's numbers rather than guess about future numbers.
Will your income likely go up much before retiring?
- Tue Mar 26, 2024 9:48 am
- Forum: Personal Investments
- Topic: Switch to Roth vs Traditional 403B
- Replies: 8
- Views: 401
Re: Switch to Roth vs Traditional 403B
If you are expecting a pension, Roth becomes more attractive, even at 24%.
- Tue Mar 26, 2024 9:05 am
- Forum: Personal Investments
- Topic: Backdoor Roth Ended up Taxable
- Replies: 22
- Views: 2544
Re: Backdoor Roth Ended up Taxable
Yes, that loss before the re-characterization is what caused those numbers. When a contribution is re-characterized, the associated gains or losses go along with the contribution into the new account.
This leaves each of you with some basis ("credit" for already taxed dollars) in the empty IRAs. If you would like to get rid of that, when you make your contributions this year, let the contributions grow before conversion to Roth. You get some "free growth" to make up for the losses you had earlier.
Glad it worked out for you.
This leaves each of you with some basis ("credit" for already taxed dollars) in the empty IRAs. If you would like to get rid of that, when you make your contributions this year, let the contributions grow before conversion to Roth. You get some "free growth" to make up for the losses you had earlier.
Glad it worked out for you.
- Tue Mar 26, 2024 8:53 am
- Forum: Personal Investments
- Topic: Muni break-even tax rate
- Replies: 12
- Views: 1374
Re: Muni break-even tax rate
This is a question probably best answered by David Grabiner. But I believe his usual reply is the breakeven point for him is about 25% federal marginal rate.
The 45% mentioned in the article represents federal, state, local, and NIIT....but it still seems high to me. Very few people would need munis if that is correct.
Since you now need bonds in taxable, have you considered I Bonds? They are tax efficient but the amount you can buy each year is limited so it may not help much. Other than that, I guess I'd be thinking a short term treasury fund.
The 45% mentioned in the article represents federal, state, local, and NIIT....but it still seems high to me. Very few people would need munis if that is correct.
Since you now need bonds in taxable, have you considered I Bonds? They are tax efficient but the amount you can buy each year is limited so it may not help much. Other than that, I guess I'd be thinking a short term treasury fund.
- Tue Mar 26, 2024 8:42 am
- Forum: Personal Investments
- Topic: Switch to Roth vs Traditional 403B
- Replies: 8
- Views: 401
Re: Switch to Roth vs Traditional 403B
I'm not sure I'd use Roth 403b in the 24% tax bracket. But if you are going to do this at some point, now is probably better than later when your tax rate is even higher than now.
The best of both worlds would be to continue with traditional now and retire earlier, giving you more years to convert traditional to Roth at lower rates. However, not everyone is interested in early retirement.
The best of both worlds would be to continue with traditional now and retire earlier, giving you more years to convert traditional to Roth at lower rates. However, not everyone is interested in early retirement.
- Tue Mar 26, 2024 8:36 am
- Forum: Personal Investments
- Topic: Backdoor Roth IRA and pro-rata rule exposure fixing?
- Replies: 1
- Views: 167
Re: Backdoor Roth IRA and pro-rata rule exposure fixing?
It sounds like you have not used backdoor Roth in the past - this is the first year. If that is correct, there will be no pro-rating if the rollover IRA has been rolled into her 401k before the end of the year.
You could even send the $5k in pre-tax gains to the 401k if you want...but that involves 2 rollovers instead of just 1 and might not be worth the trouble.
You could even send the $5k in pre-tax gains to the 401k if you want...but that involves 2 rollovers instead of just 1 and might not be worth the trouble.
- Tue Mar 26, 2024 8:21 am
- Forum: Personal Investments
- Topic: Backdoor Roth Ended up Taxable
- Replies: 22
- Views: 2544
Re: Backdoor Roth Ended up Taxable
I'd be interested in hearing how it works out. So I went through this weekend and followed the steps in the link you posted. The glaring difference was that I had it set to "I rolled over all this money to another traditional IRA or other retirement account" instead of setting it all converted to the Roth IRA. This fixed lines 16-18 on Form 8606. Thanks. Nice to know which question was the problem. Some of them are not as intuitive as one would hope. As a sanity check, as my numbers are slightly different than what you posted, could you please take a look at these? Sorry, I got off the rails by using $12,000 instead of $12,500. :( This is for my spouse's 8606, but it's the same with mine with the only difference being mine is $11...
- Mon Mar 25, 2024 8:46 pm
- Forum: Personal Finance (Not Investing)
- Topic: Turbo Tax - Cant enter Form 8606 for Backdoor Roth IRA
- Replies: 13
- Views: 728
Re: Turbo Tax - Cant enter Form 8606 for Backdoor Roth IRA
Do I just need to come up with my "own" 1099-R and report it in the income section of TT for 2023 contributions/covertions ? No. The contribution is reported on your TY2023 return, but the conversion isn't reported until your TY2024 return. Form 8606 is used for both years, just with different entries. I'm confused. we did both the contribution and conversion for 2023TY on March, 2024. No, you didn't. You did a contribution for 2023 but you did the conversion in 2024. There is no such thing as a conversion for a previous year. Then what do I need to report for 2023TY ? The 2023 contribution. or, Do I report both 2023 (6500) and 2024 contributions (7000) and coverstions in 2024 return ? You report the 2023 (6500) contribution in 2...
- Mon Mar 25, 2024 2:05 pm
- Forum: Personal Finance (Not Investing)
- Topic: Backdoor roth in 2024 for year 2023?
- Replies: 17
- Views: 564
Re: Backdoor roth in 2024 for year 2023?
Correct.
Now that you have that part figured out...if you want, you can make a 2024 contribution any time you want and convert it to Roth in 2024 as well. All of that will be handled on next year's Form 8606.
Now that you have that part figured out...if you want, you can make a 2024 contribution any time you want and convert it to Roth in 2024 as well. All of that will be handled on next year's Form 8606.
- Mon Mar 25, 2024 1:30 pm
- Forum: Personal Finance (Not Investing)
- Topic: Backdoor roth in 2024 for year 2023?
- Replies: 17
- Views: 564
Re: Backdoor roth in 2024 for year 2023?
Yes.
See if this tutorial helps you. It should be the right one even though you did not recharacterize.
https://thefinancebuff.com/backdoor-rot ... -year.html
See if this tutorial helps you. It should be the right one even though you did not recharacterize.
https://thefinancebuff.com/backdoor-rot ... -year.html
- Mon Mar 25, 2024 1:15 pm
- Forum: Personal Finance (Not Investing)
- Topic: Backdoor roth in 2024 for year 2023?
- Replies: 17
- Views: 564
Re: Backdoor roth in 2024 for year 2023?
Schwab does not provide a Form 8606. That is a tax form that you fill out when you do your taxes.
Now that we know the contribution was for 2023, you need to be sure to include this contribution (not the conversion) on your 2023 taxes. On Form 8606 lines 1,3 and 14.
How do you do your taxes?
Now that we know the contribution was for 2023, you need to be sure to include this contribution (not the conversion) on your 2023 taxes. On Form 8606 lines 1,3 and 14.
How do you do your taxes?
- Mon Mar 25, 2024 1:07 pm
- Forum: Personal Finance (Not Investing)
- Topic: Backdoor roth in 2024 for year 2023?
- Replies: 17
- Views: 564
Re: Backdoor roth in 2024 for year 2023?
Yes, we understand that part.
You MUST know if this contribution was assigned to year 2023 or 2024. Look at your account online to see. If necessary, call them and ask.The only thing I've done is put $6,500 into tIRA account...
If the contribution was for 2023, it is documented on your 2023 Form 8606. If the contribution was for 2024, you will document both the contribution and the conversion on your 2024 taxes a year from now on form 8606.
- Mon Mar 25, 2024 12:55 pm
- Forum: Personal Finance (Not Investing)
- Topic: Backdoor roth in 2024 for year 2023?
- Replies: 17
- Views: 564
Re: Backdoor roth in 2024 for year 2023?
Some information that might help you understand. An IRA contribution is made for a certain year and it is documented on that tax year's tax return. If you make an IRA contribution between January 1 and tax day in April, it could be for the previous year (2023 in this case) or the current year (2024). Generally, you are asked which year the contribution is for. So the first thing you need to do is learn what year your contribution is attributed to. If it was for year 2023, you need to document that on your 2023 taxes (Form 8606, lines 1, 3, and 14). If you do a Roth conversion, that is attached to the year in which it is done . There is no "year for" like a contribution. So the conversion you did this year will be documented on you...
- Mon Mar 25, 2024 12:44 pm
- Forum: Personal Finance (Not Investing)
- Topic: Backdoor roth in 2024 for year 2023?
- Replies: 17
- Views: 564
Re: Backdoor roth in 2024 for year 2023?
A rollover? From where?
- Mon Mar 25, 2024 12:40 pm
- Forum: Personal Investments
- Topic: Bond choices in 401k
- Replies: 35
- Views: 3315
Re: Bond choices in 401k
So it’s basically a very safe (very low risk) guaranteed return of roughly 3-4% now…would that be a fair characterization? Let's get back to this question. Bonds are safer than stocks, but that does not mean a bond fund cannot and will not lose money under certain conditions. As year 2022 demonstrated quite well, when interest rates go up, bond prices go down. People who did not know to expect this were shocked and pretty unhappy to see their bond funds losing value. And no, there is no guaranteed return for a bond fund. I'd call this bond fund about "medium safe". It is one of two bond funds that I use and I'm several years past retirement. Vanguard rates all of its mutual funds on a scale of 1 - 5 (most risky). Bond funds are a...
- Mon Mar 25, 2024 12:09 pm
- Forum: Personal Finance (Not Investing)
- Topic: Mega Back Door Roth 401K AND Back Door Roth IRA
- Replies: 14
- Views: 783
Re: Mega Back Door Roth 401K AND Back Door Roth IRA
It can be done. A word of warning though. Trying to learn backdoor Roth from someone else is fraught with potential problems...even when the someone else is very familiar with the process (which you don't seem to be). There are numerous ways to mess this up. Secondly, this backdoor Roth maneuver would take two years to complete (contribution for 2023 taxes and conversion on 2024 taxes) so it is already a confusing task for a person's first time around. If your young family member wants to dive into this, s/he needs to get in there this week and start learning what it is all about and get it down without any assistance. If you try to tell family member how to do this I'd say there is at least a 95% chance it will get messed up in one way or ...
- Mon Mar 25, 2024 7:54 am
- Forum: Personal Investments
- Topic: Correctly Representing 2 Years of Roth Backdoor Conversions That Were Done At The Same Time in Form 8606
- Replies: 7
- Views: 424
Re: Correctly Representing 2 Years of Roth Backdoor Conversions That Were Done At The Same Time in Form 8060
Agree with terran. Your 2023 non-deductible contribution has not been entered. It would show up on line 1 and make the rest of the form like you expected.
The problem is not with year 2022. It is showing up correctly.
The problem is not with year 2022. It is showing up correctly.
- Sun Mar 24, 2024 7:16 pm
- Forum: Personal Investments
- Topic: Portfolio Review in Retirement
- Replies: 30
- Views: 2725
Re: Portfolio Review in Retirement
Well, you are now.
Not sure if Roth conversions are a good choice for you or not, but something to give some thought to.
Not sure if Roth conversions are a good choice for you or not, but something to give some thought to.
- Sun Mar 24, 2024 4:19 pm
- Forum: Personal Investments
- Topic: Portfolio Review in Retirement
- Replies: 30
- Views: 2725
Re: Portfolio Review in Retirement
You have to have earned income to contribute to Roth IRA. You do not need income to convert dollars in tIRA to Roth IRA. You just have to pay the tax.GedDivaway wrote: ↑Sun Mar 24, 2024 4:06 pm I thought you had to have earned after tax dollars for a ROTH, such as a salary. All I have are funds in my IRA and taxable account.
- Sun Mar 24, 2024 2:16 pm
- Forum: Personal Investments
- Topic: three fund portfolio and tax efficiency
- Replies: 8
- Views: 933
Re: three fund portfolio and tax efficiency
Welcome to the forum. :happy Tax-efficiency is a good thing, but it does not apply equally to all situations. Without any tax-deferred accounts, you have to place your bonds in either Roth IRA or in a taxable account. There is absolutely no reason to put retirement money into taxable if you can put that same money into Roth. Conclusion = the best place for your bonds right now is Roth IRA (unless you are interested in opening a separate account at Treasury Direct and holding some I Bond there). If you are single, a $70k income would probably put you into the 22% marginal tax bracket. If you are single and have no retirement plan at work at any time during the year, you can put your IRA contribution into a traditional IRA instead of a Roth I...
- Sun Mar 24, 2024 1:33 pm
- Forum: Personal Investments
- Topic: Incorrect 1099-R from Vanguard
- Replies: 24
- Views: 2033
Re: Incorrect 1099-R from Vanguard
If you did your conversion on the 29th during business hours, the price at the time you did the conversion was the closing price on 12/28. Why do you think they should use the closing price from 12/29? If this was an ETF or specific stock, would you expect the conversion to be done at the market price when make the conversion or at some later price? That is not how Vanguard does it. I don't know what other custodians do. Mutual funds (at least at Vanguard) are traded after the end of the day. If the conversion or sale is done during the day, the new NAV computed after hours that day is the one used for the sale or conversion. If you do an oline transaction after close of business, it happens after close of business the following day. If yo...
- Sun Mar 24, 2024 1:00 pm
- Forum: Personal Investments
- Topic: Backdoor roth conversion and IRA basis
- Replies: 11
- Views: 474
Re: Backdoor roth conversion and IRA basis
You might have been in the phase out for deductible contributions, but that has nothing to do with having basis left over.
You have basis left over because your basis was more than you converted.
- Sun Mar 24, 2024 12:41 pm
- Forum: Personal Investments
- Topic: Bond choices in 401k
- Replies: 35
- Views: 3315
Re: Bond choices in 401k
Ah. I see now what the question meant.
Correct, no dividends that get reinvested. The value per share just changes.
Correct, no dividends that get reinvested. The value per share just changes.
- Sun Mar 24, 2024 12:37 pm
- Forum: Personal Investments
- Topic: Newbie Question [Roth conversions]
- Replies: 5
- Views: 376
Re: Newbie Question
1.I opened a Roth many years ago, I understand the 5 year rule. But does it start when the Roth was opened (with no conversion) or when you make the first conversion? There is more than one 5 year clock. The Roth IRA itself has a 5 year clock. Each conversion has a 5 year clock. There is more to it than that, but that's where to start. 2. I assume you can withdraw the principal at any time as you paid tax during the conversion and not the earnings. Or would it be subject to 10% penalty (I am 57). The taxable portion of a Roth conversion has a 5 year clock. Taking that money out of Roth before the clock has finished triggers the 10% penalty until you are 59.5 years old. After 59.5, there is no penalty. 3. Is there a penalty of any sort (or ...
- Sun Mar 24, 2024 12:29 pm
- Forum: Personal Investments
- Topic: Incorrect 1099-R from Vanguard
- Replies: 24
- Views: 2033
Re: Incorrect 1099-R from Vanguard
If you did your conversion on the 29th during business hours, the price at the time you did the conversion was the closing price on 12/28. Why do you think they should use the closing price from 12/29? If this was an ETF or specific stock, would you expect the conversion to be done at the market price when make the conversion or at some later price? That is not how Vanguard does it. I don't know what other custodians do. Mutual funds (at least at Vanguard) are traded after the end of the day. If the conversion or sale is done during the day, the new NAV computed after hours that day is the one used for the sale or conversion. If you do an oline transaction after close of business, it happens after close of business the following day. If yo...
- Sun Mar 24, 2024 11:41 am
- Forum: Personal Investments
- Topic: 401k (with mega roth) rollover to Vanguard IRA
- Replies: 13
- Views: 734
Re: 401k (with mega roth) rollover to Vanguard IRA
Minervablue, you say your plan has the option for mega-backdoor Roth. Yet you think your money is not in Roth 401k and you apparently have not rolled it out to Roth IRA either. The only thing to conclude from this is that you made some after-tax contributions and did not do the second step that would complete the mega-backdoor Roth process. If that is the case, the pre-tax money in your 401k should roll to tIRA and the after-tax money in the 401k should roll into Roth IRA. That is how it is done - two checks. Not all into one IRA. It is possible that they will not issue two checks to two IRAs - one to tIRA and one to Roth IRA. It is possible they will issue a check to tIRA and a check to you which you must roll into your Roth IRA yourself w...
- Sun Mar 24, 2024 11:27 am
- Forum: Personal Investments
- Topic: Tax efficiency question
- Replies: 9
- Views: 1088
Re: Tax efficiency question
From what I can tell, SS and dividends more than cover expenses. I don't see a need for an income stream from a SPIA myself.
- Sun Mar 24, 2024 10:07 am
- Forum: Personal Investments
- Topic: Consolidating ROTHs'
- Replies: 7
- Views: 1229
Re: Consolidating ROTHs'
See Alan S comments in this thread. viewtopic.php?p=7453770#p7453770
- Sun Mar 24, 2024 10:02 am
- Forum: Personal Investments
- Topic: Consolidating ROTHs'
- Replies: 7
- Views: 1229
Re: Consolidating ROTHs'
RetireGood, I'm sorry for the delay. I did not get a notification that you had posted. Interestingly, the rollover from after-tax 401k to Roth 401k (mega-backdoor) will come out of your Roth IRA first even though the ordinary backdoor Roth contributions happened first. Is it because of the ordering rules listed below at the very end? I didn't try to interpret the rules you posted below, but yes. It is because of the ordering rules. Contributions come out first. When you roll Roth 401k into Roth IRA, the contributions become part of the Roth IRA contributions. This is the opposite of what would be expected in your case (because of the conversions) but that is what the instructions for form 8606 tell us. There is only one "qualification ...
- Sun Mar 24, 2024 9:30 am
- Forum: Personal Investments
- Topic: Tax efficiency question
- Replies: 9
- Views: 1088
Re: Tax efficiency question
bt365, I went back to some of your old posts to try to understand your current questions. From what I've read -your expenses are low ($25k to $30k a year plus a modest amount of tax) -you have something in the neighborhood of $1.3 million dollars saved, almost all in a taxable account -your expenses are covered by SS (recently started) and dividends from your taxable accounts -you are currently in the 12% federal tax bracket and it appears that your state taxes are very low (Georgia is kind to seniors) -you are nowhere near triggering IRMAA -your current asset allocation is about 61% stocks and 31% bonds and you do not express discomfort with this balance Your current question(s) seem to revolve around whether to sell the VBTLX (total bond ...
- Sat Mar 23, 2024 2:58 pm
- Forum: Personal Finance (Not Investing)
- Topic: Form 8606 and Stray Dollars
- Replies: 7
- Views: 395
Re: Form 8606 and Stray Dollars
Yes, because of the rounding on line 10, you pay $0 tax this year but will pay tax on $2 next year. If it didn't round to 1, you would pay tax on the extra $2 this year and no extra tax next year. I'd send it in (efile) as is...even if it seems whacky. It all comes out in the wash. That is what I was thinking, but wanted to try and be sure. Since I made my 2024 contribution already, I filled out a theoretical 2024 8606 and my $2 becomes due (assuming you don't round .99985 up again). Next year, line 9 will be $6500 divided by line 5 $6,500 so that line 10 will be 1.0 meaning $6500 is not taxable. So, slightly different from what I said above....line 16 will be 6,500 and line 17 could be 6500 or 6498 (depending on whether it pulls over line...
- Sat Mar 23, 2024 2:29 pm
- Forum: Personal Finance (Not Investing)
- Topic: Form 8606 and Stray Dollars
- Replies: 7
- Views: 395
Re: Form 8606 and Stray Dollars
Yes, because of the rounding on line 10, you pay $0 tax this year but will pay tax on $2 next year.
If it didn't round to 1, you would pay tax on the extra $2 this year and no extra tax next year.
I'd send it in (efile) as is...even if it seems whacky. It all comes out in the wash.
If it didn't round to 1, you would pay tax on the extra $2 this year and no extra tax next year.
I'd send it in (efile) as is...even if it seems whacky. It all comes out in the wash.
- Sat Mar 23, 2024 2:10 pm
- Forum: Personal Investments
- Topic: Moving AIVSX from SIMPLE IRA to Vanguard Roth IRA
- Replies: 6
- Views: 468
Re: Moving AIVSX from SIMPLE IRA to Vanguard Roth IRA
lYou are thinking of this incorrectly. There is no limit on how much you can convert to Roth IRA. And you can still contribute to Roth IRA as well (if you have the money).DisgustinglyFrugal wrote: ↑Sat Mar 23, 2024 1:33 pm It's already >$7000 so I wouldn't be able to put it all in the Roth IRA, assuming it doesn't decline in value. Please, let me know if I'm thinking about any of this incorrectly.
You are correct that it is the continued high ER of the fund that makes it unattractive.
- Sat Mar 23, 2024 12:09 pm
- Forum: Personal Finance (Not Investing)
- Topic: Where do advisory fees show up?
- Replies: 11
- Views: 616
Re: Where do advisory fees show up?
For $100k to disappear from her account each year, something would have to show up on the quarterly and annual statements.
I do not know about the brokerage you mention, but I do know that both Fidelity and Schwab have advisors available, and even assigned to accounts to help people perform certain functions. These advisors are not performing in an AUM advisory or management function. It sounds like this could be what has been happening with MIL.
I do not know about the brokerage you mention, but I do know that both Fidelity and Schwab have advisors available, and even assigned to accounts to help people perform certain functions. These advisors are not performing in an AUM advisory or management function. It sounds like this could be what has been happening with MIL.
- Sat Mar 23, 2024 11:53 am
- Forum: Investing - Theory, News & General
- Topic: Looking for advice on unhappy experience in VG short term bond fund
- Replies: 66
- Views: 5567
Re: Looking for advice on unhappy experience in VG short term bond fund
Remember that money market funds will start having lower interest rates as the FED lowers interest rates (which they have indicated they intend to do a few times this year).
MM funds are doing quite nicely now, but will not keep up with inflation in the long run. So moving from bond funds to MM at this point could be a poor choice.
And if the FED does what it currently plans, the bond funds you currently hold will star going back up in value too.
As interest rates go up, bond fund values go down (2022). As interest rates go down, bond fund values will go up (might happen in 2024).
- Sat Mar 23, 2024 11:16 am
- Forum: Personal Investments
- Topic: Bond choices in 401k
- Replies: 35
- Views: 3315
Re: Bond choices in 401k
Welcome to the forum.Zekeman wrote: ↑Sat Mar 23, 2024 11:05 am Good morning!
I have this fund in my 401k
State Street U.S. Bond Index Securities Lending Series Fund Class XIV
It has no ticker and information on it is scant. There is no posted yield. How are we compensated for the treasury yield in this instrument?
Thank you.
This appears to be a total bond index fund. It might be a CIT which would explain why there is no ticker. CITs are fine.
https://www.bogleheads.org/wiki/Collect ... ent_Trusts
Not sure what "How are we compensated for the treasury yield in this instrument?" means.
- Sat Mar 23, 2024 9:12 am
- Forum: Personal Investments
- Topic: 401k (with mega roth) rollover to Vanguard IRA
- Replies: 13
- Views: 734
Re: 401k (with mega roth) rollover to Vanguard IRA
Yes, that is one of the possible ways to do the megaBD.terran wrote: ↑Sat Mar 23, 2024 9:00 amIs it not possible to roll after-tax 401(k) directly to Roth IRA? I thought that was one of the ways to do a mega backdoor Roth? I've only ever actually done the in-plan conversion kind.retiringwhen wrote: ↑Sat Mar 23, 2024 7:50 am With those assumptions it is very important that try to convert (back-door) the post-tax 401K balance to Roth 401K BEFORE you do any rollovers.
- Sat Mar 23, 2024 8:47 am
- Forum: Personal Investments
- Topic: Moving AIVSX from SIMPLE IRA to Vanguard Roth IRA
- Replies: 6
- Views: 468
Re: Moving AIVSX from SIMPLE IRA to Vanguard Roth IRA
Welcome to the forum.
The American Funds funds are well run funds but they do have relatively high expense ratios. It does not matter now if you paid a front end load or not...what you have is what you have. I would not keep the fund myself.
You cannot roll it into your own IRA until the 2 years is completed. Do you know when you made your first contribution? I'd roll over to traditional IRA the week after the 2 years is up. Wait until November or December to see if your income actually is as low as you expect. If low, convert to Roth then.
The American Funds funds are well run funds but they do have relatively high expense ratios. It does not matter now if you paid a front end load or not...what you have is what you have. I would not keep the fund myself.
You cannot roll it into your own IRA until the 2 years is completed. Do you know when you made your first contribution? I'd roll over to traditional IRA the week after the 2 years is up. Wait until November or December to see if your income actually is as low as you expect. If low, convert to Roth then.
- Sat Mar 23, 2024 8:38 am
- Forum: Personal Investments
- Topic: 401k (with mega roth) rollover to Vanguard IRA
- Replies: 13
- Views: 734
Re: 401k (with mega roth) rollover to Vanguard IRA
If you have mega backdoor contributions in your 401k, they should now be in Roth 401k. Are you saying that you made after-tax contributions and have not converted them to Roth?minervablue wrote: ↑Sat Mar 23, 2024 7:23 am I was terminated from my job a few weeks back and now that the final check has cleared I want to rollover my 401k to my Vanguard IRAs. Normally this is a simple process that I am familiar with, but in this case my 401k is a mixture of pre-tax and post-tax (not roth) money due to me having access to "mega backdoor" contributions.
- Sat Mar 23, 2024 8:33 am
- Forum: Personal Investments
- Topic: How to Determine Retirement AA? [also VCIT or BND?]
- Replies: 12
- Views: 1036
Re: How to Determine Retirement AA?
It's a good idea to plan ahead, but trying to pick an asset allocation for retirement 16 years out seems like a bit much.
As always, your AA should be determined by your need, willingness, and ability to take risk...at that time. You will be a different person and the world may be a very different place.
Keep saving and try to be content with some vague idea of where you want to end up in terms of AA. You'll know when you get there where you need to be.
Remember that your goal now is to make money. Your goal then is to maintain and use the money you have. The AAs you have in mind right now are more consistent with making money than keeping money.